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Gold, silver dinged by heavy profit taking; Friday's trade now key

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(Kitco News) - Gold and silver prices are sharply lower in midday U.S. trading Thursday, on heavy profit-taking pressure and weak long liquidation in the futures markets. Gold prices hit a two-week low today and silver prices a three-week low. Strong gains in the U.S. dollar index today played a part in the metals markets’ sell off. Bulls can still argue today’s price action was normal corrective pullbacks in existing price uptrends for gold and silver. Gold hit a five-month high Tuesday. However, good follow-through selling pressure on Friday and technically bearish weekly low closes would produce chart damage to suggest near-term market tops are in place. Thus, Friday’s price action will be extra important for gold and silver traders. Bulls need to step up. August gold futures were last down $38.30 at $1,870.40 and July Comex silver was last down $0.814 at $27.39 an ounce.

U.S. stock indexes were mixed to slightly weaker at midday. The U.S. indexes are trading not far below their recent record highs. Concerns about rising inflation are still lingering after the Federal Reserve’s beige book Wednesday afternoon said supply chain bottlenecks are causing some product shortages and leading to higher prices, and such could continue the rest of this year.

Traders are gearing up for what is arguably the most important U.S. economic report of the month, Friday morning’s Employment Situation Report for May from the Labor Department. The key non-farm payrolls number is forecast to come in up around 675,000 after paltry rise of 266,000 in April. The unemployment rate for May is seen at 5.9% versus 6.1% in April.

The key outside markets today see the U.S. dollar index solidly higher on a corrective bounce from recent selling pressure. Nymex crude oil prices are a bit weaker after hitting a 2.5-year high overnight, and are trading around $68.65 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently fetching around 1.627%.

Live 24 hours gold chart [Kitco Inc.]

Technically, August gold futures bulls still have the overall near-term technical advantage but faded a bit today. A two-month-old price uptrend is still in place on the daily bar chart. Bulls’ next upside price objective is to produce a close above solid resistance at this week’s high of $1,919.20. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,800.00. First resistance is seen at $1,884.30 and then at $1,900.00. First support is seen at today’s low of $1,866.70 and then at $1,850.00. Wyckoff's Market Rating: 6.5

Live 24 hours silver chart [ Kitco Inc. ]

July silver futures prices hit a three-week low today. The silver bulls still have the overall near-term technical advantage. However, a two-month-old uptrend on the daily bar chart is now in jeopardy. Silver bulls' next upside price objective is closing prices above solid technical resistance at the May high of $28.90 an ounce. The next downside price objective for the bears is closing prices below solid support at $26.00. First resistance is seen at $28.00 and then at today’s high of $28.37. Next support is seen at today’s low of $27.09 and then at $27.00. Wyckoff's Market Rating: 6.0.

July N.Y. copper closed down 1,330 points at 445.85 cents today. Prices closed nearer the session low today and hit a five-week low. The copper bulls still have the firm overall near-term technical advantage but are fading now. A near-term price uptrend on the daily bar chart has now been negated. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at this week’s high of 470.70 cents. The next downside price objective for the bears is closing prices below solid technical support at 425.00 cents. First resistance is seen at 450.00 cents and then at 455.00 cents. First support is seen at today’s low of 442.95 cents and then at 440.00 cents. Wyckoff's Market Rating: 7.0.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.